Answer:
present value = $7402.49
Explanation:
given data
time = 4 year
ordinary annuity = $2,250
interest rate = 5%
solution
we get here present value that is for 4 year with end of year $1,550 will be as
present value = [tex]\frac{C1}{(1+r)} +\frac{C2}{(1+r)^2} +\frac{C3}{(1+r)^3} +\frac{C4}{(1+r)^4}[/tex] ...............1
here C1 to C3 is $2,250 and C4 is $1,550 and r is rate i.e 0.05
put here value and we will get as
present value = [tex]\frac{2250}{(1+0.05)} +\frac{2250}{(1+0.05)^2} +\frac{2250}{(1+0.05)^3} +\frac{1550}{(1+0.05)^4}[/tex]
present value = $7402.49
